Outlook 2021+

Factors impacting GPW’s activity in 2021 include internal factors and external factors (beyond GPW’s control).

Internal factors:

Planned actions:

In 2021, the GPW Group will continue to implement its strategic initiatives under the Strategy #GPW2022 aiming at improvement of the following business areas:

• equity market;
• debt market;
• derivatives market;
• commodity market;
• information products for investors and issuers;
• development of new business segments, in particular segments based on technology;
• potential M&As.

Activities addressing investors

The top priorities in 2021 include to support continued interest of individual investors in GPW’s offer.

Planned actions:

To boost interest of individual and institutional investors in small and medium-sized companies, GPW has expanded its Analytical Coverage Support Programme from 39 to 51 companies. Better access to free-of-charge up-to-date research is a key factor ensuring improved availability of information and greater investor interest in the segment. With a view to expanding its international investor pool, GPW initiated a series of virtual roadshows addressing investors in Asia, the USA, and Europe. To improve market liquidity, GPW is encouraging new algorithmic traders to join the market, for instance under the HVP/HVF programmes.

ESG support and development on the Polish capital market

GPW wants to make an active contribution to the promotion of sustainable development on the Polish capital market.

Planned actions:

In the coming years, we will launch new initiatives to support issuers and investors in their alignment with changing ESG-related legal requirements. We want to support issuers in successful communication of ESG activities to investors. As a public company, GPW will focus on the development of in-house ESG competences. We are working on potential development of the product offer, promotion of sustainable investment, and collaboration with other exchanges in the region.

Expansion of the product range

It is always GPW’s priority to expand its product range in order to address the needs of market participants.

Planned actions:

GPW continuously monitors demand of market participants for new products and improves its product offer accordingly. GPW is planning to introduce new ETFs, structured products on new underlying instruments, and single-stock futures. GPW’s offer will include shares of global companies listed in PLN on the Global Connect market. The commodity market will focus on further development of the Agricultural Market, including the opening of a forward market whose development is in progress. Our offer of information services also continues to expand.

New issuers

There were 21 new listings on both GPW equity markets in 2020 (including two companies which transferred from NewConnect to the Main Market) vs. 22 new listings in 2019. The total IPO value on both equity markets was PLN 9.6 billion in 2020 and the total SPO value was PLN 4.7 billion. The outlook of IPOs and SPOs in 2021 is optimistic.

Actions:

To promote financing on the capital market, GPW takes the following initiatives:

• direct communications with companies which could be interested in going public on GPW;
• GPW Innovation Day events dedicated to non-public companies which meet with exchange investors;
• GPW Growth training programme which supports the growth of SMEs, including their growth on GPW;
• WARTO BYĆ SPÓŁKĄ GIEŁDOWĄ – a programme which supports companies across many thematic areas relating to their presence on GPW.

Technological development

Dynamic development of new technology, big data, blockchain, artificial intelligence, process automation and robotisation drives change in the financial industry. In the coming years, GPW will focus on the development of its existing business model by adding solutions based on new technology. The Group has established the company GPW Tech which is responsible for the development and commercialisation of new technology.

Activities in the technology segment focus on the development of state-of-the-art innovative IT systems, including a trading system, tools supporting analyses of market data and supporting investment decisions, and tools supporting further development of state-of-the-art trading segments including algorithmic trading. GPW follows the trend with its GPW Data project which will introduce business reporting standards supporting automated data processing and reducing the cost of corporate reporting, deploy big data technology in compiling data useful for capital market investors, generate reports using such data, and implement artificial intelligence (AI) tools supporting local and international investors.

Planned actions:

The company GPW Tech, which is the technology arm of the Group, will continue to develop in 2021. GPW Tech supports GPW’s activity focusing on the development of four products:

• Trading System (a top priority; it is the biggest IT project of the GPW Group): the first modules will be ready at the turn of 2022 and will first be rolled out in BondSpot. The Trading System is scheduled for roll-out at the turn of 2024;
• GRC (Governance, Risk & Compliance) – an IT solution supporting process and risk management, compliance and internal audit. The promotion of the GRC system among potential clients started in Q4 2020.
• TCA Tool (Transaction Cost Analysis Tool) – a tool facilitating transaction cost analysis, addressed mainly to brokers and funds, which may also be sold to other exchanges. The TCA Tool application has been presented to the Polish buy side/sell side and the Three Seas Exchanges.
• Indexator – a tool which will replace GPW’s legacy index calculator.

Continuation of an attractive dividend policy

GPW has maintained its dividend policy.

Planned actions:

According to the dividend policy, GPW is planning to pay dividend of at least 60% of the annual consolidated net profit of GPW Group attributable to the GPW shareholders, adjusted for the share of profit of associates. The dividend from the 2019 profit was PLN 2.4 per share; the dividend from the profits of 2020-2022 will be increased by at least PLN 0.1 per share every year.

External factors - beyond GPW’s control:

Competitive environment

Competition among financial instrument trading venues in Europe has increased in the last few years due to EU directives: MiFID I and MiFID II. Regulated market operators compete for issuers, investors, liquidity, and turnover.

Traditional exchanges face competition of alternative trading venues including MTF (Multilateral Trading Facility), OTC (Over the Counter Market) and SI (Systematic Internaliser), whose development is facilitated by MiFID I and MiFID II.

Planned actions:

GPW continuously takes initiatives to expand its product offer and make it more attractive as a trading venue. Our activity focuses on the development of the entire product offer addressing the needs of market participants, the development of our competences, and the ambition of being a venue of first choice for companies which want to go public. We are working to improve the liquidity and quality of the order book by offering promotions for clients and implementing programmes for market makers.

Macroeconomic conditions, the government’s economic policy, conditions on the exchange market

Poland’s Gross Domestic Product (GDP) contracted 2.8% in 2020, which implies that recession in Poland was mild compared to most EU countries. The Polish economy navigated through the crisis caused by the pandemic relatively easily. As a result, the development gap to the “Old European Union” continued to be closed even at a moderately faster rate. The economic shock caused by the COVID-19 pandemic was strong but not as strong as expected at the outset of the crisis. Consumption and investments fell sharply in the crisis but economic activity soon recovered, bolstered by fiscal and monetary measures. According to economists, a V-shaped recovery is curbed by subsequent waves of the pandemic. However, recent statistics suggest quick adaptation across the population, mitigating the sensitivity of the economy to restrictions. Consumption and exports have recovered strongly but continued uncertainty about the economic outlook keeps companies’ investments low. According to economists, 2021 is bound to be better than 2020. How much better depends on the spread of the contagion and the efficiency of the vaccination programme. Consequently, expectations for 2021 are marked by strong uncertainty, even if this year may have fewer surprises in store. The market consensus is that the pandemic will gradually recede in 2021. Mass vaccination programmes should build herd resistance, preventing new hard lockdowns.

Planned actions:

Irrespective of further spread of the pandemic and its impact on the local and global economy, GPW is planning to focus on further support extended to all market participants. Our priorities include: to support further recovery of IPOs, to retain individual investors, to provide education and support in view of challenges posed by ESG to many companies, and to pursue organic growth in our core business. As a public company, we will take actions to create shareholder value among others by pursuing the established dividend policy.